Hedge Funds Win Big From Comcast's Move for Sky

02/27/18 10:56 AM EST
By Laurence Fletcher 

Hedge funds that amassed stakes in Sky PLC over recent months are enjoying a bumper payday following Comcast Corp.'s surprise move Tuesday for the U.K. broadcaster.

Among funds that benefited from a 21% surge in Sky's shares are Seth Klarman's Baupost Group LLC, which owns 4.6% in the company; Elliott Management Corp., which holds 2.49%; and D.E. Shaw & Co., with 1.06%.

Tuesday's share-price jump means a profit of more than GBP180 million ($250 million) on Tuesday for Baupost, and a gain of around GBP100 million for Elliott, according to calculations by The Wall Street Journal.

"They're probably opening bottles of champagne," said Tyler Tebbs, executive director of the event-driven group at broker Olivetree Financial.

While some funds such as Crispin Odey's Odey Asset Management, which holds 0.9% of Sky, have been long-term shareholders, other funds have taken or increased positions in the wake of Walt Disney Co.'s deal in December to buy most of 21st Century Fox Inc. That deal was perceived to reduce the political risk that Fox's bid for the remainder of Sky would be blocked.

Elliott has been adding to its position since disclosing a stake last month. D.E. Shaw increased its position as recently as Monday, according to filings. However, AQR Capital Management reduced its stake on Friday.

While Comcast's entry has created a complex, four-way deal bidding situation, many of the hedge funds have played the situation simply through buying the stock, rather than a more complicated trade sometimes used in such takeover situations.

With investors already betting that Fox would need to raise its bid, Comcast's move opens the possibility of a bidding war for Sky -- a dream scenario for hedge funds holding the stock.

Odey, D.E. Shaw and AQR didn't respond to a request for comment. Elliott and Baupost declined to comment.

21st Century Fox and Wall Street Journal-parent News Corp share common ownership.

Write to Laurence Fletcher at laurence.fletcher@wsj.com


(END) Dow Jones Newswires

February 27, 2018 10:56 ET (15:56 GMT)

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